That’s a bad rule. The purchaser had the ability to thwart the fraud and the true owner did not. The better rule is that an individual cannot pass a better title than he has.
Yeah, maybe. There's a reason different jurisdictions go different ways on this. You could also argue that the true owner could have thwarted the fraud by more careful identity management, and the purchaser (in hiring a solicitor to ensure the bona fides of the seller) has done nothing wrong. And if the true owner was absentee, the fraud might not be uncovered for years, long after the purchaser has moved in and made reliance on ownership.
The bottom line is that there are two innocent victims and one or both are getting screwed. I prefer your rule too, overall, but there are circumstances where one or the other is going to be more unjust in a particular case.
Well, if they made the bank take the hit (until they can get money back from the fraudster, and since most residential purchases are financed with a mortgage) I'd wager that suddenly ID/ownership checks would become bulletproof...
